With the wider adoption and popularity of cryptocurrencies, nations started to impose taxes on digital assets, yet some charge huge taxes, and others with nominal taxes.
A recently published report notes that due to a weak set of rules and tax policies India, the nation with higher crypto adoption, has lost over $1 billion in taxes from the sector.
The unclear set of rules and huge taxes have directed Indian traders towards offshore exchanges based in developed nations.
Esya Centre revealed in its report that the government of India has already missed the chance to collect around 6,000 Crores of Indian rupees in taxes since July 2022 from cryptocurrency traders as they migrated to foreign exchanges due to clarity over taxes and regulations in the nation.
Few experts noted while talking about the future of cryptocurrencies in India, that the government is likely to restrict the usage of crypto in the coming times. However, the government is yet to announce official information about the restriction on digital assets and their trading.
In terms of taxes on cryptocurrency, India is one of the nations that charges massive charges, the unclear regulatory stance over digital assets in the nation has directed enthusiasts towards offshore exchanges.
India to remain resilient over Crypto!
In the past year, the government of India has tried many times to regulate the cryptocurrency market, by introducing AML concerning laws to restrict the access of foreign exchanges.
Most recently a statement of the deputy governor of the Reserve Bank of India went viral due to criticism of digital assets like Nitin and others.
Many people concur that virtual currencies carry more hazards than advantages, and the Reserve Bank of India (RBI) has always maintained a cautious stance.
Critics claim that because cryptocurrencies are decentralized and uncontrolled, they are vulnerable to abuse, which raises questions about their security and stability. The future of digital currencies in India is therefore still up in the air.
India has taken a strict stance on cryptocurrencies since 2018. In December 2023, the Financial Intelligence Unit (FIU) sent show-cause warnings to nine offshore crypto exchanges for violating domestic laws, further solidifying this position.
A stringent tax structure for bitcoin transactions has also been implemented by the nation.
The government made its first major attempt to regulate the crypto market and exert more control over the industry in April 2022 when it levied a 30% tax on unrealized crypto profits in addition to a 1% tax deducted at source (TDS).
Shaktikanta Das, the governor of the Reserve Bank of India, expressed his discomfort with the concept of “private money” at G30, the 39th Annual International Banking Seminar held in Washington, DC. He said that the idea is undermining regional governments’ sovereignty and the payment system.
Although the India Central Bank’s decision to introduce its CBDC is generally praised, research indicates that Indian citizens still prefer crypto over e-rupees.
As per finance experts, the negative attitude of India towards digital assets will not only affect the Indian market but also the global cryptocurrency market. The continued optimism will likely pump a sentiment of degrowth in the Indian continent.
International market watchers argue that the Indian market has much more potential than any other nation’s market.